By Sebastian Moronta Blanco, Staff Writer
Time is money. Money is also money, and some money can be very expensive, relative to how much that money is worth. This has been true of the penny for some time now, which last year cost about 1.4 cents to make. This is why senators John McCain and Mike Enzi have proposed the Currency Optimization, Innovation and National Savings (COINS) Act, which in simple terms aims to modernize our currency system in a number of ways.
The first and most significant is the shifting of our central currency unit – the dollar bill – to the dollar coin. This is because according to the U.S. Mint, dollar bills have an average lifespan of 5.8 years before they have to be reprinted, whereas coins last in excess of 35 years, when they can be melted down and reused as they are 100 percent recyclable.
Robert Whaler, a Professor of Economics at Wake Forest University, has studied the effects of currency changes on the economy, and has estimated that this change alone could save the Mint about 500 million dollars a year.
The bill also orders the Mint to halt production of the penny for a period of ten years, after three of which the Mint must submit a report to Congress on the effect of this change on the economy, and among other things, to evaluate whether the penny should be decommissioned all together. Whaler estimated this change could save the Mint around 900 Million a year.
The debate on whether to keep the penny is not a new one. The last piece of currency to be decommissioned was the half-cent, which stopped circulation in 1857. It was worth approximately eleven cents in today’s money when it was removed, and back then it had more utility than pennies do now.
Pennies nowadays often can’t be used in vending machines or toll booths, and are rarely accepted in bulk for purchasing goods or services. Most pennies are kept in jars, or discarded, forcing the Mint to print more pennies than all other coins combined.
Over the past thirty years there have been several attempts by legislators to modernize currency and oust the penny. Rep. Jim Kolbe of Arizona has made three attempts to modernize currency in 1989, 2001, and again in 2006, each time failing to garner enough support. How is the penny fighting so hard to stick around?
The short answer is lobbyists. The zinc and copper lobby, along with their front group Americans for Common Cents, have campaigned for keeping the penny, citing a report by Navigant Consulting that finds costs could rise from eliminating the penny. This report, as well as the consulting group who issued it, are on the lobbyists payroll.
In today’s economy, the penny is virtually worthless. Based on the median U.S. wage of $17 an hour, the two seconds it takes to bend over and pick up a penny is worth more than the penny itself. Furthermore the time at registers counting out pennies slows down transactions, costing businesses a potential loss of billions.
Former President Barack Obama at one point voiced his views on the penny. Australia, Canada, New Zealand and Mexico have all eliminated their penny-equivalent denomination, and when he was asked in a 2013 interview why the U.S. hasn’t done the same, he responded “I’ve got to tell you, John, I don’t know…Anytime we’re spending money on something people don’t actually use, that’s an example of things we should probably change.”